Gold Price Slides and extended its recent decline on Tuesday, tumbling to a fresh two-week low as investor confidence surged following a ceasefire agreement between Israel and Iran. The truce, hailed by US President Donald Trump as “complete and total,” has temporarily soothed geopolitical tensions in the Middle East, sparking a rally in global equities and diminishing the allure of safe-haven assets like gold.
Despite the drop, gold found some cushioning from renewed US Dollar weakness. Markets are increasingly pricing in a potential Federal Reserve rate cut as early as July, with recent dovish commentary from Fed officials amplifying those expectations. Still, the bullish momentum remains capped for now, with technical breakdowns and strong risk-on flows dominating short-term sentiment.
Ceasefire Triggers Risk-On Mood, Hits Bullion Demand
The announcement of a ceasefire between Israel and Iran prompted a sharp shift in market sentiment. Investors moved away from defensive assets like gold and piled into riskier instruments, including equities and industrial commodities. Global stock indices opened the week with strong gains, reflecting growing optimism that an immediate escalation of Middle East hostilities may be off the table—at least temporarily.
While the news initially pushed gold lower, lingering doubts about the ceasefire’s durability limited the downside. Reports suggest that Israel has continued some military activity against Iranian targets even after the ceasefire declaration. Iran’s Foreign Minister Abbas Araqchi also stated that any further Israeli “aggression” could reignite tensions. This fragile peace has kept some support under the yellow metal.
Fed Doves Offer Support Amid US Economic Crosswinds
While geopolitical calm has undermined gold’s traditional safe-haven role, macroeconomic developments in the United States have kept the market guessing. US PMI data released on Monday was mixed, showing manufacturing activity holding steady while services slightly cooled. The composite PMI slipped marginally to 52.8, suggesting the US economy remains resilient but is not overheating.
Crucially, dovish signals from top Federal Reserve officials have increased the probability of a rate cut at the July 29–30 policy meeting. Fed Governor Michelle Bowman remarked that risks to the labor market are mounting and inflationary pressures from tariffs are not as concerning. Her stance aligns with earlier comments from Governor Christopher Waller, who also favors near-term rate reductions.
Lower interest rates typically benefit non-yielding assets like gold by reducing the opportunity cost of holding them. As the USD slides further on dovish Fed commentary, gold could attract some haven flows despite improved geopolitical sentiment
Gold Technical Breakdown Adds to Bearish Pressure
From a technical perspective, gold’s decline was exacerbated by a failure to break above the psychologically significant $3,400 level. The precious metal has repeatedly struggled to sustain gains beyond this resistance zone. On Tuesday, the drop accelerated as XAU/USD breached support from a short-term ascending channel on the charts, triggering additional selling pressure.
Momentum indicators also point to weakening bullish sentiment, with RSI and MACD both turning lower on intraday charts. Unless gold recovers above $3,375 decisively, traders may remain inclined to test lower support zones near $3,330 and $3,300 in the coming sessions.
Trump’s Trade Policies and Fiscal Concerns Complicate Outlook
Aside from Middle East dynamics and Fed policy, broader macroeconomic risks are still in play. Investors are becoming increasingly wary of President Trump’s unpredictable trade stance, particularly toward China and the European Union. Erratic tariff threats, supply chain disruptions, and diplomatic tensions have the potential to trigger fresh market volatility—a scenario that could favor gold’s safe-haven appeal once again.
At the same time, concerns about the ballooning US fiscal deficit and rising debt servicing costs are fueling long-term uncertainty about the health of the US economy and the stability of the Dollar. These factors may provide a fundamental cushion for gold prices even if the short-term trend remains bearish.
Markets Await Powell’s Testimony for Rate-Cut Clarity
Investor attention now turns to a packed US economic calendar, including the Conference Board’s Consumer Confidence Index and the Richmond Fed’s Manufacturing Index. However, the main event will be Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee.
Traders will parse every word of Powell’s remarks for guidance on the Fed’s next policy steps. If Powell echoes the recent dovish tone expressed by Bowman and Waller, gold could regain some bullish momentum, especially if the USD continues to soften in response.
A hawkish surprise, on the other hand, could reignite Dollar strength and deepen gold’s correction. As such, the next 48 hours are crucial in shaping short-term direction for the yellow metal.
Key Levels to Watch
Immediate Resistance: $3,375 / $3,400
Immediate Support: $3,330 / $3,300
Breakout Target (Uptrend Revival): $3,450
Breakdown Risk Zone: Below $3,300
The 200-hour moving average and trendline supports also lie close to current levels, and a decisive breach could trigger further liquidation. Conversely, if Powell delivers dovish surprises, a rebound toward $3,400 cannot be ruled out.
Conclusion: Gold Faces Dual Pressures from Risk Sentiment and Fed Outlook
In the short term, gold appears to be caught between easing geopolitical tensions and growing anticipation of Fed rate cuts. The Israel-Iran ceasefire has undoubtedly hurt bullion’s appeal as a crisis hedge, but persistent uncertainty surrounding US monetary and fiscal policy could limit the downside.
With Fed Chair Powell’s testimony looming, traders may remain on the sidelines, awaiting clearer cues on rate policy. As such, gold may stay range-bound within $3,300–$3,375 until new macro signals emerge.
